Chinese smartphone brands shipped three out of four handsets sold in India in the second quarter despite a government crackdown targeting Chinese firms, although the Indian market experienced a sequential decline due to weak demand, a Canalys report showed. India’s smartphone market grew 12 per cent in the June quarter compared to the same period last year, on a lower baseline as the industry was suffering from the effects of a second wave of Covid-19 in 2021, according to a Canalys report on Wednesday. Shipments fell 5 per cent compared to the first quarter of 2022, marking a third consecutive quarter of declines due to weakening demand in the Indian market. Chinese smartphone makers accounted for four of the top 5 players in the country, led by Xiaomi Corp with 7 million units shipped. Collectively, Chinese players shipped 76 per cent of all smartphones in the market in the past quarter, according to Canalys. China’s supply chain ‘irreplaceable’, says contract maker of Xiaomi smartphones In total, the combined market share of Chinese vendors was slightly down from the same period last year, when it shipped 80 per cent of all handsets in the market, according to Sanyam Chaurasia, analyst at Canalys. He added that competitors including Samsung and Apple have been catching up. Meanwhile, Chinese smartphone brands have also been subject to an ongoing government crackdown, which has grown in intensity since a deadly border clash in 2020 . Indian authorities conducted a raid on dozens of Vivo offices earlier this month. The Enforcement Directorate, the country’s financial crime watchdog, said that it had seized 119 bank accounts linked to Vivo India containing a combined US$58.7 million. The move followed similar investigations of Xiaomi and Chinese telecoms equipment giant Huawei Technologies Co . In May, the Enforcement Directorate said it seized US$725 million from Xiaomi , accusing the Beijing-based firm of illegal remittances. The company was later asked by India’s finance ministry to pay US$87.8 million in import taxes that it allegedly owed. All three Chinese companies have said they always comply with local laws and regulations and will cooperate with authorities. Chaurasia from Canalys noted that when it comes to government scrutiny, “business remains as usual but Chinese brands need to take care of compliance risk going forward”. Xiaomi taps Vietnamese factory for smartphone output amid supply chain shifts While Xiaomi remains the top selling brand in India, its share has shrunk in recent months amid supply chain issues. Xiaomi had 19 per cent of the Indian market in the second quarter, down from 29 per cent in the same period last year. It was slightly ahead of Samsung Electronics, with an 18 per cent share, followed by Chinese brands Realme, Vivo and Oppo. “Xiaomi has faced supply issues for the last 3 to 4 quarters amid pent-up demand in India. Challenger brands with optimum supply such as Realme, Tecno, Infinix, and Samsung … have gained momentum in that period,” said Chaurasia. However, Chaurasia expects Xiaomi to fight off more inroads by competitors with its strong portfolio for the rest of the year.